National minimum wages, capital mobility, and global economic growth
AbstractHow do national minimum wages affect global economic growth? We address this question in a two-country endogenous growth model with capital mobility that emphasizes a link between wages, savings and growth. We identify the conditions on technology and national preferences that determine whether national minimum wages are a stimulus or an obstacle to growth. Technology matters because it determines the functional distribution of global income as well as output effects associated with the emergence of national unemployment due to minimum wages. Interestingly, differences in national savings propensities do not only affect the strength of the growth effect associated with minimum wages but may even determine its direction.
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Bibliographic InfoArticle provided by Elsevier in its journal Economics Letters.
Volume (Year): 90 (2006)
Issue (Month): 2 (February)
Contact details of provider:
Web page: http://www.elsevier.com/locate/ecolet
Other versions of this item:
- Irmen, Andreas & Wigger, Berthold, 2002. "National Minimum Wages, Capital Mobility and Global Economic Growth," CEPR Discussion Papers 3286, C.E.P.R. Discussion Papers.
- E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
- F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
- O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
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